Glossary
What is Reorder level?
The reorder level is the stock quantity at which an item should be reordered, set high enough to cover demand until new supply arrives. When stock falls to that level the system can flag it so fast-moving goods do not run out.
A reorder level is the stock figure that tells you to buy now. Set it well and the new delivery lands just as the shelf runs low. Set it badly and you either run out in the busy week or tie up cash in stock that sits.
How it works in practice
The usual formula is:
Reorder level = average daily sales × lead time in days + safety stock
Average daily sales comes from your own sales history. Lead time is the number of days between placing a purchase order and the goods being on your shelf, not the number the supplier quotes. Safety stock covers the days when sales run high or the truck runs late.
As an example, a hardware shop sells about 20 bags of cement a day. The dealer usually delivers in 4 days, and the shop keeps 30 bags as a buffer. The reorder level is 20 × 4 + 30 = 110 bags. When the count falls to 110 the order goes out, and roughly 30 bags should still be there when the new stock arrives.
How it differs from reorder quantity
Some systems call the reorder level a minimum stock level; the idea is the same. The reorder quantity is a different number: how much to buy once the level is reached. That depends on pack sizes, the supplier’s minimum order and your cash, not on the formula above.
Common mistakes
- One reorder level for every item. Fast movers, slow movers and seasonal goods each need their own.
- Never revisiting the figure. Sales in the weeks before Dashain are not the same as sales in Poush.
- Using the lead time the supplier promises instead of the real one, including the days an order waits for approval.
- Copying a godown’s level to a shop counter. Each location has its own sales rate and resupply time.
- Treating the alert as the decision. A reorder level tells you to check, not what to buy.
If you still keep stock on paper, add a reorder level beside each item in a stock register format and compare it with the running balance.
In Kuver Books, each product carries a minimum stock level that raises low-stock alerts on the product list and the dashboard. It does not place orders for you. The pending transactions and low stock help page explains how to work through the list.
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